What the UK-EU Trade and Cooperation Agreement means for Northern Ireland
Professor Katy Hayward provides an initial analysis of the UK-EU Trade and Cooperation Agreement in light of the Protocol and the 1998 Agreement.
Northern Ireland was following two sets of UK-EU negotiations during the transition period: those on the future UK-EU relationship and those on implementing the Ireland/Northern Ireland Protocol. These two negotiations became closely embroiled in the last few months of 2020. In response to their growing demands for information, businesses in Northern Ireland were told that some key decisions regarding the Protocol depended on progress in the wider UK-EU talks. As it happened, the UK-EU Joint Committee, co-chaired by Michael Gove and Maroš Šefčovič, came to final agreement about the Protocol just a week before the UK-EU Trade and Cooperation Agreement (TCA) was sealed. In retrospect, this makes sense. What the Joint Committee decisions do is anticipate a hard ‘Irish Sea’ trade border, and allow for some time-limited mitigations for Northern Ireland to adjust to what this means.
The Protocol places Northern Ireland de facto in the EU’s single market for goods in order for goods to continue to freely circulate between NI and the EU, i.e. across the Irish land border. Because this had to happen regardless of how close or distant the future UK-EU relationship was, the EU’s external border for goods is thus effectively moved by the Protocol to the Irish Sea. As a consequence, whatever the UK negotiated for the terms of its future trade with the EU would have ramifications for movement of goods between Britain and Northern Ireland. The very existence of a zero tariff, zero quota deal greatly reduces the risk of Northern Ireland being used as a ‘backdoor’ to the EU for GB goods (e.g. to avoid tariffs), and thus mitigates the need for pre-emptive charging of tariffs on GB goods entering NI. However, beyond this, the TCA does very little to ‘soften’ the Irish Sea border.
The necessary mitigations for Northern Ireland
Indeed, the ‘thinness’ of the TCA makes it imperative for Northern Ireland to make the most of those mitigations negotiated for it. For example, the TCA does not contain an agreement for mutual recognition of equivalence in sanitary and phytosanitary (SPS) measures (i.e. for food safety), which is where some of the most burdensome and costly checks and controls arise. As part of the mid-December Joint Committee decisions, the EU agreed to allow simplified certification for designated traders bringing such products into Northern Ireland in return for the UK government making a unilateral declaration to abide fully by the EU’s standards. But these terms expire at the end of March, when the EU’s standards are set to increase. Although the UK Government has introduced a scheme to help cover the associated costs of formal veterinary certificates, the new ‘red tape’ involved will be immense. The agri-food sector in Northern Ireland may protest, but this same red tape will be faced by all such exporters from Britain into the EU market. These are trade barriers by [UK government] choice.
One of the reasons why negotiations on the future deal became entwined with those on the operation of the Protocol was because of the ‘Level Playing Field’ (LPF) demands. The EU does not want the UK to have a competitive advantage by, for example, lowering environmental or employment standards, or through the use of subsidies. The EU has been equally insistent that what it has come to refer to as ‘United Kingdom (Northern Ireland)’ doesn’t have such advantages either. Although the regulatory scope of the Protocol does not extend (for the most part) beyond the production of goods, it does keep Northern Ireland following the EU’s rules when it comes to state aid. The elements of the TCA that cover LPF are a compromise, and although far from guaranteeing a close UK-EU relationship on these matters, they bring some assurance of at least an intention of non-regression in key policy areas across the UK. In maintaining patterns of broad similarity between the UK and EU, this will assist Northern Ireland’s alignment vis-à-vis Great Britain and Ireland in some important and practical ways not covered by the Protocol, for example in protection of the environment. However, these conditions also mean that if there were to be UK-EU disputes in these areas, there is a risk of knock-on consequences for Northern Ireland. For example, if tariffs are imposed by the EU on GB goods in a particular sector, then this will have immediate effect on GB into NI movement of such goods, with those tariffs needing to be paid on entry to NI (albeit reimbursed afterwards).
Beyond movement of goods
Although the Protocol avoids a hard Irish border for goods, it does not cover other types of movement that were facilitated by common EU membership, including movement of services and people. There is very little in the TCA that helps smooth this movement across the Irish border (or between NI and the wider EU). There are just two specific references in the TCA itself to Ireland/Northern Ireland. One is to allow bus services to pick up and set down passengers in both Ireland and Northern Ireland, enabling cross-border services to continue with no restrictions. The second is in relation to cabotage, i.e. allowing NI-based hauliers to make two pick-ups in Ireland in any seven day period (whereas this is limited to one pick-up for the rest of the EU). But the cross-border challenge for the island of Ireland is rather greater than road transport.
The great majority of the services NI exports are to the Republic of Ireland. The Common Travel Area (and the fact that British citizens have an automatic right to work in Ireland, and vice versa) does offer some means to plug the gaps in the TCA here. For example, recognition of UK-awarded professional qualifications now has to happen on a sector-by-sector, country-by-country basis. The Memorandum of Understanding between the British and Irish Governments on the Common Travel Area (I will spare the use of the acronym here!) committed them to ensuring mutual recognition of professional qualifications ‘in accordance with national laws’. This should be an urgent priority for Strand 3 of the 1998 Agreement in the coming year.
However, there are limits to what can be agreed bilaterally between the UK and Ireland, namely where the competences concerned are EU rather than national ones. One such area is in relation to data. Much service provision depends on being able to share personal data across a border. The TCA grants a 6 month grace period for continued flow of personal data to/from EU/EFTA states to the UK until the EU adopts a decision about the ‘adequacy’ of the UK’s data protection standards. This is good news for now. But we should not assume that such a decision will be granted. As a member-state, the UK has fallen short on data protection standards in the recent past, and the EU’s criteria for sharing personal data with a third country are even more strict than for a member-state.
Data exchange is crucial for security cooperation too. The part of the TCA that deals with law enforcement and judicial cooperation goes slightly further than we might have feared, and is therefore welcome when it comes to UK-Irish policing cooperation, including across the Irish border. The UK loses its status as a member of Europol and Eurojust (having instead ‘liaison’ officers to those bodies), and loses access to the most advanced database for security information with the Schengen zone (SIS II). However, it keeps access to the Secure Information Exchange Network Application (SIENA) messaging system in Europol, and its interconnection software for exchanging of criminal record information is anticipated to meet the necessary specifications. Whilst the UK can no longer participate in the European Arrest Warrant, the TCA does contain agreement for time-limited processes for extradition and surrender between the UK and EU countries. This ensures that there is a means to avoid the kind of tensions that arose in British-Irish relations over such matters in the past, albeit via a ‘downgraded’ version to the one jointly accessed as common EU members.
The part of the TCA dealing with law enforcement and judicial cooperation is treated quite distinctly in that either party to it can suspend or terminate this area of cooperation without it affecting the rest of the TCA. This is worth noting because it is this part of the Agreement that contains one of the most significant elements of the TCA as far as NI is concerned. In order to have such cooperation, the UK is committed to protect and give domestic effect to fundamental rights, such as those set out in the European Convention on Human Rights (ECHR). If there are serious and systemic deficiencies in the way the other Party is protecting fundamental rights or the rule of law, the EU will be able to suspend cooperation with the UK on law enforcement and judicial matters. Whilst this is no guarantee that the UK will not (as threatened) repeal the Human Rights Act, what it does mean is that the UK’s expressed commitment to upholding ECHR in Northern Ireland is now not only in the Protocol (Article 2) but also in the TCA, with direct and costly consequences if it is breached.
What should we keep an eye on?
To conclude, there are two very striking things about the TCA. First, it is enormously complicated – despite the extreme limits on time for its scrutiny and ratification, it will take months for experts, lawyers and officials to fully work out its implications. (And how many of them will be reading-across from these to the Protocol?) Secondly, it is a work in progress. There are many references in the document to ‘future development’, or anticipated improvements. Many such adjustments will come through the work of Specialised Committees and complicated [read: obtuse] governance arrangements. The TCA reflects an effort to enable ‘trade and cooperation’ at the same time as the UK is trying to minimise its ties with the EU. This places strain on the position of Northern Ireland, which remains very much ‘tied’ to the EU albeit with extremely limited means of influencing what that means in practice.
In light of this, there are four overriding concerns for Northern Ireland. How will the evolution of the TCA be connected to that of the Protocol? How will the governance of the Protocol (including its unique institutions for that purpose) be linked into relevant areas of governance for the TCA (e.g. in the Specialised Committee for SPS measures)? How will the British-Irish and north/south strands work to develop substantive and serious bilateral arrangements to meet the gaps of the TCA and the Common Travel Area? And, last but not least, when the real impact of Brexit takes effect in Britain and the EU, how much care and ‘flexibility’ will either of them be prepared to show this small but fragile region on the periphery of both?